Flipkart to buyback 50% of employee ESOPs & 30% of ex-employees for $125-129/share

Online retailer Flipkart will repurchase up to 50% of its existing employees’ vested Esops (Employee stock ownership plan) and up to 30% of its former employees’ vested Esops at a share price ranging from $125-129, the Bengaluru-headquartered company informed some of its former employees in an email over the last couple of days.

As part of US retail giant Walmart’s $16 billion investment in Flipkart, a large number of people associated with the e-commerce company are set to benefit once the deal closes in FY19, including Flipkart’s previous employees.

Current employees of the online retailer can cash-out their vested Esops in three tranches.

“50% of the vested options can be liquidated on the date of closing of the ongoing transaction with Walmart,” read the email.“25% of the vested options can be liquidated at the end of year one after the first liquidation.”

Remaining 25% can be cashed out at the end of year one post first liquidation, added the email. However, there was no mention of how the remaining vested Esops of former employees will be liquidated.

The company email said that liquidation would be at a price reflective of the transaction price, in the range of $125-129 per option. Interestingly, Walmart’s share price at the time the story went to press was $83.38.

ET was the first to report on Friday that Flipkart may allow its former employees to exercise an option of cashing out just 30% of their vested stock options. On the other hand, employees currently working with the online retailer may be allowed to liquidate 50% of their vested Esops during the first year and cash out 25% each in the second and third year, say sources.

The company is said to have set aside $500 million for what will be the largest repurchase in the Indian startup ecosystem. It will take place upon closure of the deal and approval of the board of directors.

Prior to this, Flipkart has organised a large-scale Esop repurchase programme during October last year when the company repurchased stock options at $85.2 where the current employees were allowed to sell 25% of their vested options while former employees were asked to limit it to 10%.